Issue of Debt

Zhejiang Expressway Co
11 September 2002

Zhejiang Expressway Co

Bond Issue

 (A joint stock limited company incorporated in the People's Republic of China with limited liability)

                     Proposed Domestic Corporate Bond Issue

Summary

Following a preliminary approval obtained from the State Development Planning
Commission (the 'SDPC') on 26th August, 2002, Zhejiang Expressway Co., Ltd. (the
'Company') intends to make formal application to the SDPC and the Shanghai Stock
Exchange of the PRC for the issue of RMB1 billion of corporate bonds (the
'Bonds') to institutional and public investors in the PRC (the 'Bond Issue') and
for listing of the Bonds on the Shanghai Stock Exchange. The Company intends to
use the proceeds of the Bond Issue to fund the construction work to widen
sections of the Shanghai-Hangzhou-Ningbo Expressway.

Under the Company Law of the PRC and the Company's articles of association, the
Bond Issue is subject to the approval of shareholders (including holders of H
shares of the Company ('H Shares') and holders of domestic shares of the Company
('Domestic Shares')). An extraordinary general meeting will be held on 15th
November, 2002 (the 'EGM') at which a special resolution will be proposed to the
shareholders of the Company for their consideration and, if thought fit,
approval of the Bond Issue. Holders of H Shares and holders of Domestic Shares
whose names appear on the register of members of the Company at the close of
trading on 15th October, 2002 shall have the right to attend the EGM.

Upon the approval of the Bond Issue by the shareholders of the Company, the
issuing of the Bonds will still be subject to the final approval of the SDPC.
The timing of the Bond Issue is subject to both the SDPC's final approval and
the bond market conditions in the PRC.

Saved as disclosed herein, the directors of the Company (the 'Directors') hereby
confirm that they are not aware of any matter discloseable under the general
obligation imposed by paragraph 2 of the Listing Agreement, which is or may be
of a price-sensitive nature.

Following a preliminary approval obtained from the SDPC on 26th August, 2002,
the Company intends to make formal application to the SDPC and the Shanghai
Stock Exchange of the PRC for the issue of RMB1 billion of corporate bonds to
institutional and public investors in the PRC and for listing of the Bonds on
the Shanghai Stock Exchange. The Company intends to use the proceeds of the Bond
Issue to fund the construction work to widen sections of the
Shanghai-Hangzhou-Ningbo Expressway.

DETAILS THE BOND ISSUE

The proposed arrangements for the Bond Issue are as follows:


        (1)     Amount of Bonds to be issued: RMB1 billion.

        (2)     Target subscribers: Institutional and public investors in the PRC.

        (3)     Maturity of the Bonds to be issued: 7-15 years.

        (4)     Interest to be paid: Approximately 3.80% - 4.80% per annum, to
        be determined based on market demand and negotiations between the
        underwriters and the Company.

        (5)     Proposed guarantee for the Bond Issue: One of the domestic
        commercial banks; the cost for the guarantee is expected to be less than
        0.1% per annum.

        (6)     Listing of the Bonds: the Bonds are proposed to be listed on the
        Shanghai Stock Exchange.

USE OF PROCEEDS

It is expected that the net proceeds arising from the Bond Issue will amount to
approximately RMB980 million. The Directors presently intend to apply the
proceeds to fund the construction to widen two sections of the
Shanghai-Hangzhou-Ningbo Expressway. Details are as follows:


        (1)     approximately RMB240 million for funding the remaining
        construction works to widen the Hongken to Guzhu section; and

        (2)     the balance for funding the construction to widen the Shensi to
        Hongken section.

As announced on 10th January, 2001, the Directors initially intended to fund the
widening construction works for the two sections by an issue of A shares in the
Company in the PRC. For reasons set out under the section headed 'Reasons for
proposed domestic corporate Bond Issue', the Directors consider that the Bond
Issue would be a more preferable source of funding.

The Hongken to Guzhu section of the Shanghai-Hangzhou-Ningbo Expressway is 44 km
in length, and the first stage of the construction to widen the expressway is to
expand it from the existing four lanes to six lanes. Construction commenced in
October 2000 and is expected to complete in four years. The second stage of the
construction to widen the Shenshi to Hongken section is a project to expand the
40.4 km section from four lanes to six lanes in respect of the 23.6 km section
from Shenshi to Pengbu and the 8.7 km from Xiaoshan to Hongken, and from four
lanes to eight lanes in respect of the 8.1 km section from Pengbu to Xiaoshan.
Construction is expected to commence at the end of 2002 with construction
completing in 2005.

IMPACT OF THE BOND ISSUE ON THE CAPITAL STRUCTURE OF THE COMPANY

On the basis of the estimated net proceeds arising from the Bond Issue, the
Company's capital structure as at 30th June, 2002 and after the completion of
the Bond Issue are as follows:
                                                                                        As at               After the
                                                                              30th June, 2002              Bond Issue
                                                                                  RMB million             RMB million

Total Debt                                                                              3,315                   4,315

Total Asset                                                                            14,607                  15,587

The ratio of Total Debt to Total Asset                                                  22.7%                   27.7%

REASONS FOR PROPOSED DOMESTIC CORPORATE BOND ISSUE

The Directors believe that the Bond Issue is in the interests of the Company and
will be beneficial to the improvement of the shareholder's return on their
investment. The Directors believe that the cost of debt financing is much lower
than that of equity financing, thus preferring debt financing over equity
financing in general. A corporate bond issue has the lowest cost of financing,
compared with bank loans and other financing tools currently available. The
interest rate for the Bonds is below 5% per annum, whereas the current basic
interest rates of bank loans in the PRC for 6 months, 12 months, 3 years and 5
years are 5.04%, 5.31%, 5.49% and 5.58% per annum, respectively. Furthermore,
the Bond Issue will raise the total debt to total asset ratio of the Company,
which in turn will improve the return of equity of the Company.

EXTRAORDINARY GENERAL MEETING

Under the Company Law of the PRC and the Company's articles of association, the
Bond Issue is subject to the approval of shareholders (including holders of H
Shares and holders of Domestic Shares). An EGM will be held on 15th November,
2002 at which a special resolution will be proposed to the shareholders of the
Company for their consideration and, if thought fit, approval of the Bond Issue.
The Company will dispatch a notice of the EGM to the shareholders of the Company
informing the exact date and venue of convening the EGM. Upon the approval of
the Bond Issue at the EGM, the Bond Issue will still be subject to the final
approval of the SDPC, and the approval of the Shanghai Stock Exchange for the
listing of and dealing in the Bonds on the Shanghai Stock Exchange.

For the purposes of EGM, the register of members of the Company will be closed
from 16th October, 2002 to 14th November, 2002 (both days inclusive), during
which no transfer of shares will be registered. Accordingly, holders of H Shares
and holders of Domestic Shares whose names appear on the register of members of
the Company at the close of trading on 15th October, 2002 shall have the right
to attend the EGM.

Holders of H Shares who intend to attend the EGM must deliver all transfer
instruments and the relevant share certificates to the share registrar for H
Shares, Hong Kong Registrars Limited, located at Shops 1712-1716, 17th Floor,
Hopewell Center, 183 Queen's Road East, Hong Kong, at or before 4:00 p.m. on
15th October, 2002.

GENERAL INFORMATION

Saved as disclosed herein, the Directors confirm that they are not aware of any
matter discloseable under the general obligation imposed by paragraph 2 of the
Listing Agreement, which is or may be of a price-sensitive nature.

                                                           By Order of the Board
                                                   Zhejiang Expressway Co., Ltd.
                                                                    JIANG Wenyao
                                                               Company Secretary
                                                  10th September, 2002, Hangzhou

    Please also refer to the published version of this announcement in the South
                                China Morning Post.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.


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